Adaptive Strategy in Motion: Running the Business While Rethinking It

Businesses today face constant change. Sticking to rigid, annual planning cycles doesn’t work anymore. Markets shift quickly - consumer preferences evolve in weeks, new technologies emerge in months, and global disruptions can happen overnight. To stay competitive, companies need a flexible approach that allows them to adjust plans and decisions continuously.

The solution? Treat strategy as a living process. This means moving away from static, yearly plans and adopting a system of constant feedback, quick experiments, and real-time adjustments. Here's how companies are doing it:

• Continuous Planning: Replace annual reviews with ongoing updates based on market changes.

• Experimentation: Test small ideas rapidly and scale what works.

• Outcome-Focused: Shift from rigid goals to flexible objectives that align with current priorities.

• AI-Driven Insights: Use technology to analyze data faster and make informed decisions.

This approach doesn’t disrupt daily operations but helps businesses respond faster to opportunities and challenges. Tools like RESTRAT’s framework help organizations integrate this mindset into their processes, ensuring they can both run their business and rethink strategies at the same time.

The takeaway? Companies that adjust quickly - not those with the most polished plans - will lead the future.

Steve McCrone | Adaptive Strategy: Leading and Navigating Complexity

Core Principles: Insights from Leading Experts

The idea of an adaptive strategy isn't just a passing trend - it's becoming the heartbeat of modern organizations. Drawing from the insights of top consulting firms and business thinkers, these principles highlight why continuous strategic adjustment is not only possible but essential in today's fast-paced markets.

Strategy as a Living Process (McKinsey)

McKinsey has reshaped how we think about strategic planning. Traditional annual planning cycles, they argue, often fail to keep pace with rapidly changing market conditions. Instead, they propose treating strategy as a living process - one that evolves, learns, and adapts in real time.

This approach emphasizes real-time sensing and quick adjustments, cutting down delays in decision-making. Think of it as strategy in motion, constantly looping between insights and actions. Organizations adopting this mindset can respond to market shifts 30–40% faster than those stuck in rigid planning cycles, turning speed into a competitive edge. McKinsey also stresses the importance of linking strategic insights directly to operations, ensuring that decisions flow seamlessly into execution and resource allocation.

The key takeaway? Strategy isn't a static document - it’s a dynamic process that thrives on continuous learning and adaptation.

Experiment-Based Models (Bain's Micro-Battles)

Bain & Company offers a fresh approach with their Micro-Battles System, which replaces large, high-stakes initiatives with smaller, focused experiments. This method allows organizations to test ideas quickly and at a lower risk.

Here’s how it works: teams identify specific market opportunities or operational challenges, then design rapid experiments to test potential solutions. These experiments often take just weeks to execute, providing concrete data on what works and what doesn’t. Organizations using this method can test 3–5 times more initiatives than those relying on traditional planning, enabling faster and better-informed decisions. Successful experiments can be scaled, while ineffective ones are quickly discarded, keeping the organization agile and responsive.

This experiment-driven approach is a cornerstone of adaptive strategy, allowing businesses to recalibrate quickly based on real-world feedback.

Outcomes Over Outputs (Jonathan Smart)

Jonathan Smart’s work on business agility shifts the focus from simply completing tasks to achieving meaningful results. His framework, summed up in the phrase "Better Value Sooner Safer Happier" (BVSSH), emphasizes delivering real value - whether it’s improving customer satisfaction, enhancing quality, or boosting employee engagement - over just ticking off deliverables.

This outcomes-focused mindset creates feedback loops that drive continuous improvement. Smart explains:

"Most organizations would say they have a solid strategy, and some are pursuing new ways of working to achieve that strategy; however, often not in an optimal way. BVSSH is the unlock for organisations and this book gives the practical guidance to WIN" [1].

By prioritizing measurable results, this approach ensures that strategic adjustments align with the organization’s broader goals and values.

Discovery-Driven Planning (Rita McGrath)

Rita McGrath’s Discovery-Driven Planning offers a structured way to adapt strategies as new opportunities and information arise. Her approach starts with the understanding that initial assumptions often won’t hold up, making it crucial to build learning mechanisms into the planning process from the very beginning.

Organizations using this method test their assumptions through low-cost experiments, allowing them to pivot quickly as new insights emerge. Rather than seeing these pivots as failures, McGrath frames them as necessary adjustments in uncertain environments. This mindset also encourages businesses to seize unexpected opportunities, turning uncertainty into an advantage. It’s a method that embraces change and positions organizations to thrive in unpredictable markets.

Together, these insights form the foundation of an adaptive strategy framework, enabling organizations to sense, adjust, and act in real time.

The RESTRAT Adaptive-Strategy Loop: A Framework for Action

The RESTRAT Loop takes well-known expert principles and turns them into a practical, ongoing system that helps organizations stay alert to market shifts, interpret insights, and act decisively - all without losing operational momentum.

This isn't just another planning tool. It's a rhythm that connects how an organization senses changes and responds to feedback, creating a seamless system. The goal? To adjust strategies continuously without disrupting day-to-day operations.

Sense: Gathering Signals in Real-Time

The first step, sensing, redefines how organizations collect market intelligence. While traditional approaches rely on occasional reports or surveys, adaptive strategies call for constant, real-time awareness of changing customer behaviors, market trends, and competitor moves.

This is where artificial intelligence shines. AI processes massive amounts of data - ranging from customer interactions to operational metrics - spotting patterns and anomalies that might otherwise go unnoticed. RESTRAT calls this system a "foresight architecture", enabling businesses to anticipate changes before they fully materialize.

Synthesize and Reprioritize: Turning Data into Decisions

Once signals are gathered, the next step is to transform raw data into actionable strategies. This phase ensures that insights from the sensing process are quickly converted into decisions, leaving behind the delays of traditional planning cycles. The result? A strategy that evolves as the market does.

Leadership plays a key role here, regularly reviewing insights and adjusting priorities. Instead of sticking rigidly to pre-set plans, teams focus on achieving desired outcomes and adapt their efforts as needed. This "outcomes over outputs" mindset ensures resources are used effectively and flexibly.

Execute and Learn: Iterative Action and Feedback

With decisions in place, execution becomes the focus - but not in the traditional sense. Adaptive strategy emphasizes quick actions paired with immediate feedback. Teams run small-scale tests to validate ideas, refine strategies, or pivot before committing to larger initiatives.

These iterative cycles create a feedback loop, where lessons learned feed directly back into the sensing phase. This continuous improvement process strengthens the connection between strategy and execution, fostering a culture of experimentation and learning. Over time, this approach helps teams innovate and stay resilient, even in unpredictable environments.

Measuring the Benefits of Adaptive Strategy

The value of adaptive strategy becomes clear when organizations track the right metrics. Instead of measuring success by how well a plan is followed, the focus shifts to responsiveness, agility in decision-making, and alignment with changing market demands.

For example, as seen in earlier discussions on iterative testing, this approach reduces decision-making delays and ensures resources align with current priorities. By consistently reevaluating their strategies, organizations can seize opportunities and tackle challenges as they arise, gaining a competitive edge.

Annual Planning vs. Adaptive Cycles: A Direct Comparison

Annual planning and adaptive cycles take very different approaches to decision-making, market responsiveness, and resource allocation. Annual planning is built around fixed schedules, often requiring months of preparation for decisions that remain locked in for the entire year. In contrast, adaptive cycles thrive on flexibility, using continuous adjustments and real-time responses to stay aligned with evolving circumstances.

Key Differences Between the Two Approaches

The primary distinction between these models lies in their timing and adaptability. Annual planning adheres to a rigid schedule, while adaptive cycles rely on real-time feedback and continuous adjustments. This allows organizations using adaptive cycles to respond quickly to new opportunities or threats, while annual planning often leaves businesses tied to outdated plans.

Another key difference is how each model addresses change. Annual planning’s static nature can trap organizations into pursuing initiatives that no longer match market realities. Adaptive cycles, on the other hand, continually update strategies to reflect current market conditions and consumer behavior. Similarly, while annual planning relies on fixed targets and key performance indicators (KPIs), adaptive cycles center on evolving outcomes, often guided by Objectives and Key Results (OKRs). This creates a continuous feedback loop that drives ongoing improvements.

Aspect	Annual Planning	Adaptive Cycles
Decision Frequency	Once or twice yearly	Continuous, real-time
Market Responsiveness	Slow, reactive	Fast, proactive
Resource Allocation	Fixed for 12 months	Dynamic, ongoing adjustments
Goal Framework	Fixed targets	Evolving outcomes (OKRs)
Feedback Integration	Quarterly reviews	Continuous feedback loops
Risk Management	Annual assessments	Real-time monitoring

This adaptability makes it easier to manage portfolios that respond to changing market signals.

How Adaptive Strategy Enables Real-Time Portfolio Management

The flexibility of adaptive cycles brings a significant advantage to portfolio management. Adaptive strategy allows organizations to adjust investment priorities, reallocate resources, and refine performance metrics in real time.

Resource allocation becomes more fluid under adaptive cycles. Instead of locking budgets and assigning personnel for an entire fiscal year, organizations can use both leading and lagging indicators - like OKRs - to make dynamic adjustments. This flexibility is crucial when unexpected opportunities arise or when competitive threats demand immediate action.

Continuous prioritization is another cornerstone of adaptive strategy. Portfolio leaders assess initiatives based on up-to-date market conditions, customer feedback, and competitive insights. This ensures that resources are consistently directed toward the most valuable opportunities, rather than being tied to outdated assumptions made months earlier.

Adaptive cycles also integrate agile governance and continuous compliance, striking a balance between speed and control. This approach allows organizations to make rapid adjustments while ensuring that decisions remain aligned with strategic objectives. Measurable outcomes then act as a feedback loop, guiding decisions on where to invest, divest, or pivot resources.

The result? A portfolio that stays aligned with shifting market dynamics, enabling organizations to seize emerging opportunities and avoid being constrained by outdated plans or assumptions.

Building Adaptive Strategy into Organizational Rhythms

To weave adaptive thinking into the fabric of an organization, leaders need to make deliberate adjustments across leadership styles, operations, and system integration. The RESTRAT Adaptive-Strategy Loop offers a framework for this transformation, helping companies embed adaptability into their daily routines. For the most successful organizations, adaptive strategy becomes as natural as their core operational processes.

Strategy no longer sits in binders - it lives in loops. This shift requires leaders to embrace new behaviors, foster a supportive culture, and implement technology systems that enable a responsive and agile organization. The ultimate goal? To make adaptive strategy a fundamental part of how business is conducted, rather than a separate initiative.

Leadership and Cultural Shifts

The journey toward adaptive strategy begins with leadership. Traditional executives often emphasize control and predictability, but adaptive leaders focus on engagement, inclusion, and empowerment. They recognize that valuable insights often emerge from the front lines, not just the boardroom.

Jonathan Smart’s research highlights the importance of prioritizing clear, measurable outcomes over rigid processes. His "Better Value Sooner Safer Happier" (BVSSH) framework serves as both a guide and a feedback loop for continuous improvement. This approach encourages leaders to shift from commanding to coaching, and from directing to discovering.

"Most organizations would say they have a solid strategy, and some are pursuing new ways of working to achieve that strategy; however, often not in an optimal way. BVSSH is the unlock for organisations and this book gives the practical guidance to WIN."－ Courtney Kissler, VP Global Technology, Nike [1]

Cultural transformation follows the example set by leadership. Organizations must view adaptability and agility as strengths, rather than trendy buzzwords. However, culture change isn’t one-size-fits-all - it evolves uniquely within each organization. Adaptive leaders foster an environment where uncertainty is seen as an opportunity and measurable outcomes guide progress. This mindset encourages continuous improvement and builds a resilient culture that persists even through leadership changes.

Leaders must also model the behaviors they wish to see. This means openly acknowledging when strategies aren’t working, celebrating smart risks (even when they fail), and prioritizing learning over being right. The rhythm becomes: sense what’s happening, synthesize the implications, make swift decisions, and learn from the outcomes. Once leadership and culture are aligned, the next step is to integrate technology systems that can operationalize these adaptive loops.

Systems and Tools for Real-Time Adaptation

Cultural changes lay the groundwork for technological systems that enable real-time adaptation. The key isn’t just adopting the latest tools but creating a connected system that unites sensing, funding, and feedback processes to support swift decision-making.

AI-powered tools play a critical role in processing the overwhelming amount of data generated by modern markets. These tools can analyze customer behavior, competitor activity, and market trends faster than any human team, turning raw data into actionable insights for strategic decisions.

RESTRAT’s approach integrates AI agents and copilots directly into existing workflows. For example:

• Product Owners receive assistance with backlog refinement and user story creation.

• Product Managers gain insights for prioritization and market analysis.

• Scrum Masters get enhanced retrospective insights that link team performance to strategic goals.

This integration ensures that adaptive strategy becomes part of daily work rather than an extra task. Effective systems connect sensing, funding, and feedback loops, enabling organizations to adjust strategies without disrupting operations.

To support this, portfolio management tools must allow for dynamic resource allocation instead of locking budgets on an annual basis. These tools should connect strategic priorities with team capacity, project progress, and real-time market feedback. This way, leaders can identify which initiatives are delivering value and which need adjustments - long before the next quarterly review.

What matters most is integration. The best systems link existing platforms like Jira, Confluence, and Trello with AI-driven insights and portfolio visibility. This creates a unified view of strategy and execution, enabling faster and more informed decision-making.

The ultimate goal is to build what Jonathan Smart calls an "AI-enabled enterprise", where technology enhances human judgment rather than replacing it. Teams gain better insights, leaders spot patterns earlier, and the organization responds to changes faster than competitors.

Adaptiveness is the new stability. By embedding adaptive strategy into every aspect of operations, organizations can balance efficiency with the ability to rethink and pivot in real time. Those who master this balance will consistently stay ahead of market changes rather than scrambling to catch up.

Conclusion: Running and Rethinking for Long-Term Success

The organizations that will lead the way in 2026 and beyond won’t be the ones with the most polished annual plans. Instead, they’ll be the ones that excel at running their business while constantly rethinking it. This shift from rigid, static planning to a more dynamic and flexible approach isn’t just a minor tweak - it’s a complete overhaul of how strategy is practiced. Adaptive strategy is no longer a luxury; it’s a necessity for staying ahead.

The most effective leaders know how to run and rethink simultaneously. This ability has become the hallmark of resilient organizations - those that can deliver operational excellence while remaining flexible enough to adapt to change. Insights from thought leaders like McKinsey, Bain, Jonathan Smart, and Rita McGrath all point to the same conclusion: adaptability isn’t just a nice-to-have; it’s essential for survival.

The results speak for themselves. Companies that adopt adaptive strategy frameworks are better equipped to handle market volatility, align their strategic goals with daily execution, and make decisions faster at the portfolio level. These aren’t small, incremental gains - they’re game-changing advantages that build momentum over time.

RESTRAT’s adaptive-strategy loop - sense, synthesize, reprioritize, execute, and learn - offers a practical framework to embed adaptability into daily business operations. By incorporating AI-powered sensing tools into workflows, teams can gain real-time insights that connect market signals directly to actionable improvements. This creates a seamless link between strategy and execution.

However, this approach requires a cultural shift. It’s not enough to have a strategy; organizations need the right systems and mindset to adapt effectively. Adaptive strategy stands out because it emphasizes measurable outcomes, serving as both a guide and a feedback loop. Frameworks like "Better Value Sooner Safer Happier" provide clear metrics for progress, ensuring that adaptation efforts stay grounded in tangible business results.

Modern technology makes this all possible. AI tools can analyze vast amounts of data - customer behaviors, competitor activities, and market trends - faster than any human team. These insights, paired with portfolio management systems that allow for dynamic resource allocation, create a level of strategic clarity that was previously unattainable.

The organizations that will thrive in the future are those that embrace adaptiveness as their foundation for stability. They’ll build systems to detect market changes early, establish funding models that allow for quick pivots, and cultivate cultures that see uncertainty not as a threat, but as an opportunity. Adaptive strategy isn’t just a process - it’s a rhythm that organizations must master.

Leaders today face a simple but critical decision: stick with outdated annual planning cycles or embrace adaptive frameworks that turn unpredictability into a competitive edge. Those who choose the latter won’t just weather the next wave of disruption - they’ll be the ones driving it.

FAQs

How can businesses adopt adaptive strategy without disrupting daily operations?

To implement a flexible strategy without disrupting everyday operations, businesses can shift from rigid annual planning to a more dynamic, ongoing process. This means incorporating learning loops - a cycle of sensing, synthesizing, reprioritizing, executing, and learning - into their workflows. These loops help organizations adjust regularly while keeping their operations steady.

Using AI tools during the "sense" phase can make a big difference. These tools can process complex data and turn it into practical insights, enabling quicker reactions to changes. Moreover, prioritizing outcomes over outputs, as Jonathan Smart suggests, ensures that strategies stay aligned with long-term objectives while maintaining smooth day-to-day functioning. This approach allows businesses to operate efficiently while remaining adaptable and prepared for the future.

How does AI enhance adaptive strategies, and how can businesses use it for better real-time decisions?

AI is a game-changer when it comes to turning complex data into clear, actionable insights. With this ability, businesses can quickly spot market changes, identify new trends, and anticipate potential risks with a level of precision and speed that wasn’t possible before.

When companies weave AI into the core of their strategy, especially in the data-sensing phase, they can simplify decision-making processes. This means faster reactions to market fluctuations and a stronger connection between their strategic goals and on-the-ground execution. The result? Leaders can cut down on delays and make real-time decisions that are both informed and focused on achieving the best outcomes.

How does adaptive strategy differ from traditional annual planning, and why does it improve an organization's ability to adapt to market changes?

Traditional annual planning often sticks to rigid cycles and set goals, which can make organizations sluggish when unexpected changes arise. On the other hand, adaptive strategy takes a more fluid approach. It works as an ongoing process, using iterative learning to detect shifts, adjust priorities, and change course in real time.

This flexible method allows businesses to respond to market fluctuations up to 30–40% faster, bridge the gap between strategy and execution, and cut down on decision-making delays. By emphasizing continuous learning and agility, adaptive strategy helps companies stay efficient while rethinking their approach, keeping them moving forward and ahead of the curve.

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